The Affordable Care Act (ACA) has been playing a big role in employee benefits packages since 2010. Organizations obviously want to design competitive employee benefits packages in order to attract and retain the best talent available; however, they also have to keep costs in check and comply with the myriad laws and regulations that apply to benefits.
If your organization has at least 50 full-time equivalent employees, the ACA requires that you offer affordable, minimum value health insurance to your full-time employees. But the vast majority of organizations that size were already offering coverage prior to the ACA.
When creating a competitive employee benefits package, the ACA's employer mandate establishes the minimum requirements to which all large employers must adhere. In order to avoid exposure to the penalty, you have to pay enough of the premium to ensure that your employees pay no more than 9.66 percent of their income for just their own coverage in 2016, although there's no requirement that you cover the premium for your employees' dependents. Similarly, the minimum value requirement is the bottom threshold for how robust your health plan must be.
But you can make your employee benefits package more competitive by covering more of your employees' total premium — including the premium for dependents — than the employer mandate requires. Your health plan can be more generous than the requirements set forth in the ACA, as well, and you can include coverage for things like adult dental and vision, disability and long-term care. These are "excepted benefits," which means they are not required or regulated by the ACA. But offering them makes your employee benefits package more competitive.
If your organization's health plan was already in place as of March 23, 2010, and it hasn't changed significantly since then, your plan is grandfathered and is exempt from many of the ACA's requirements. According to the Kaiser Family Foundation, 35 percent of firms that offer employer-sponsored health benefits still had at least one grandfathered plan option available to their employees in 2015. Grandfathered plans have become less common over the years since 2010, but a quarter of all workers covered by employer-sponsored health plans were enrolled in grandfathered coverage as of 2015.
If your health plan is grandfathered, it's possible that the health insurance portion of your employee benefits package is not as competitive as other organizations that have opted to switch to ACA-compliant coverage. For example, the ACA's requirement that health plans cover preventive care — including contraception — with no cost-sharing is very popular with employees and the public, but your plan might not include that feature if it's grandfathered. If you've kept a grandfathered plan in place, it's wise to re-evaluate that decision periodically to make sure that your employee benefits package continues to stack up against the options that your employees would be likely to find elsewhere.
The ACA Defines the Minimums
The ACA established the minimum requirements to which employers must follow in terms of health coverage. All employer-sponsored plans — including grandfathered plans — must allow dependents to remain on the plan until age 26, must comply with the medical loss ratio (MLR) requirements, according to the Centers for Medicare and Medicaid Services, and cannot have annual or lifetime benefit maximums. Non-grandfathered plans must comply with additional ACA provisions.
Because the ACA applies equally to all large organizations, designing a competitive, up-to-date employee benefits package involves understanding the ACA's requirements and then finding ways to set yourself apart from your competitors. There are a variety of ways that can be done, including coverage that's more robust than required, increased employer premium contributions, supplemental coverage, wellness programs and the use of tax-advantaged options like FSAs and HSAs.
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